American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Articles Civil War ChristopherBlattmanYale U EdwardMiguelU CA, Berkeley 3 57 Most nations have experienced an internal armed conflict since 1960. Yet while civil war is central to many nations' development, it has stood at the periphery of economics research and teaching. The past decade has witnessed a long overdue explosion of research into war's causes and consequences. We summarize progress, identify weaknesses, and chart a path forward. Why war? Existing theory is provocative but incomplete, omitting advances in behavioral economics and making little progress in key areas, like why armed groups form and cohere, or how more than two armed sides compete. Empirical work finds that low per capita incomes and slow economic growth are both robustly linked to civil war. Yet there is little consensus on the most effective policies to avert conflicts or promote postwar recovery. Cross-country analysis of war will benefit from more attention to causal identification and stronger links to theory. We argue that micro-level analysis and case studies are also crucial to decipher war's causes, conduct, and consequences. We bring a growth theoretic approach to the study of conflict consequences to highlight areas for research, most of all the study of war's impact on institutions. We conclude with a plea for new and better data. ( JEL D72, D74, O17) http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.3 10.1257/jel.48.1.3 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Articles The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey Renee B.AdamsU Queensland and ECGI Benjamin E.HermalinU CA, Berkeley Michael S.WeisbachOH State U 58 107 This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Benjamin E. Hermalin and Michael S. Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards because makeup and actions are jointly endogenous. A focus of this survey is how the literature, theoretical as well as empirical, deals -- or on occasions fails to deal -- with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance. (JEL G34, L25) http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.58 10.1257/jel.48.1.58 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Articles A Review of Scott E. Page's The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies Yannis M.IoannidesTufts U 108 122 This assessment of Scott Page's The Difference (Princeton University Press, 2007) emphasizes the depth and breadth of the book's coverage and arguments and checks them against existing empirical evidence, when available. It argues that the book navigates artfully between being a "manifesto" for diversity and rigorous science writing while at the same time marketing economic science in new ways. The review welcomes the book's popularization of richer aspects of everyday decision making, individual and collective, and its making an excellent case for the social significance of abstract economic theorizing, especially about problem solving. It praises the book's lively interpretations of statistical tools of decision making by means of enticing narratives. The book's rhetoric urges us to move beyond accepting diversity as a matter of taste, or even because of its beneficial effects on the "production function," and ultimately adopts its powerful logic. It speculates that the book's true impact will likely come after thorough empirical research. In empirical endeavors, issues of definition, especially of identity and of measurement, and evaluation of policies that would enhance diversity would be decisive. In democratic societies, policies may pose new dilemmas as they benefit from public interest in overcoming the accumulation of past disadvantages. (JEL D23, Z13) http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.108 10.1257/jel.48.1.108 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Forum on the Role of the Federal Reserve How Central Should the Central Bank Be? Alan S.BlinderPrinceton U 123 133 The nature and scope of the Federal Reserve's authority and the structure of its decision making are now "on the table" to an extent that has not been seen since 1935, and the Fed's vaunted independence is under some attack. This essay asks what the Federal Reserve should -- and shouldn't -- do, leaning heavily on the concept of economies of scope. In particular, I conclude that the central bank should monitor and regulate systemic risk because preserving financial stability is (a) closely aligned with the standard objectives of monetary policy and (b) likely to require lender of last resort powers. I also conclude that the Fed should supervise large financial institutions because that function is so closely to regulating systemic risk. However, several other functions now performed by the Fed could easily be done elsewhere. ( JEL E52, E58, G21, G28) http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.123 10.1257/jel.48.1.123 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Forum on the Role of the Federal Reserve What Powers for the Federal Reserve? MartinFeldsteinHarvard U 134 145 In this essay, I explain my reasons for the following policy recommendations: (1) The Fed should continue to manage monetary policy as it has in the past, should act as the nation's lender of last resort, should fully supervise the large bank holding companies and their subsidiary banks, and should be given resolution authority over the institutions that it supervises. (2) While a council of supervisors and regulators can play a useful role in dealing with macro prudential risks, it should not replace the central role of the Federal Reserve. (3) The virtually unlimited lending powers that the Fed has recently exercised in creating credit and helping individual institutions should be restricted in duration and subjected to formal Treasury approval backed by Congressional preauthorization of funds. (4) The Fed's capital rules for commercial banks need to be strengthened by replacing the existing risk-based capital approach with a broader definition of risk and the introduction of contingent capital. (5) Subjecting mortgage lending to a broader range of Federal Reserve regulations and allowing the Fed to deal with nonbank creators of mortgage products would be better than the creation of a new consumer financial protection organization. (JEL E52, E58, G21, G28) http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.134 10.1257/jel.48.1.134 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Book Reviews Book Reviews 146 185 http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.146 10.1257/jel.48.1.146 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Annotated Listing of New Books Annotated Listing of New Books 186 263 http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.186 10.1257/jel.48.1.186 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 JEL Classification System JEL Classification System 264 277 http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.264 10.1257/jel.48.1.264 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 48 1 March 2010 http://www.aeaweb.org/issue.php?journal=JEL&volume=48&issue=1 Journal Article Front Matter i ii http://www.aeaweb.org/articles.php?doi=10.1257/jel.48.1.i 10.1257/jel.48.1.i